Health plans use of number of cost containment tools in their daily operations, including TPL (third party liability) identification, coordination of benefits (COB) and subrogation.
The first tool is known as TPL identification. This is when a health plan including its contracted vendors utilize health claims data and other plan participant information to determine if the participant is a third party claimant in an injury claim, and if the participant received a settlement from an insurer or defendant.
Identifying TPL cases is highly dependent on a number of factors, which traditionally make it more of a best guess than a knowledge-based operation. Generally, it consists of two parts.
First, health plans and their vendors frequently data mine submitted health provider claims, looking for particular diagnosis and procedure codes, which have a possibility of indicating an accident or injury situation relating to the provider services rendered to the plan participant.
The provider claim data does indicate when the individual receiving care has sought health care services as a result of an auto accident, work-related injury or “other accident”. However, these choices do not necessarily indicate fault, nor do they indicate whether or not the health plan's participant has or will file an injury claim against a responsible party.
Additionally, many types of injury claims, such as those relating to professional and product liability, as well as wrongful death, are generally not well identified by health claims data alone.
Many injury claims are settled without going to court; therefore, such information is kept privately between claimant, their attorney and the responsible party, which is typically a liability insurer of self-pay defendant.
The second part in identifying TPL situations is when health plans and vendors, upon establishing a reasonable “hunch” from the data mined claim information, send out generic accident questionnaires to their selected plan participants.
These form letters rely squarely on the plan participant to admit to having an injury where another party was involved, as well as volunteer their choice to be involved in an injury claim. Once answered accurately, these questionnaires are sent back to the health plan or its vendor, thereby allowing the plan to stake a financial claim to a portion of monies paid from an injury claim settlement, to the plan participant.
Such surveys are notoriously ineffective because participants can answer “no” when asked if a third party was involved because they believe that answering “yes” could lead to an investigation or further involvement on their part.
If an injury claim is accurately identified by the participant's response, the second tool a health plan uses is a follow-up action known as health care subrogation. This is the health plan's right to pursue any course of action, in its own name or the name of its self-insured client, against a third party who is liable for a loss which has been paid by the plan. If a settlement has been paid by the health plan to the participant, the health plan stakes a subrogation claim against the participant directly.
A third tool is also a follow-up action to TPL identification; it is known as Coordination of Benefits (COB). COB is used by health plans to halt and if necessary, recover current health claim payments from contracted health care providers, when such claim payments have been or are related to a TPL circumstance.
Additionally, subrogation and COB have time factors, where the sooner a plan knows about a TPL applicable to its plan participant, the better chance it may have to recover its full stake of overpaid monies owed. For this reason, accuracy plus speed are vital components of identification and cost containment operations.
These and other known drawbacks exist in the area of third party liability (TPL) identification and related cost containment operations.